Detailed Financial Plan for Alastair and Wendy Windsor's Future

This financial plan addresses the retirement and investment needs of Alastair and Wendy Windsor, a couple nearing retirement. The report analyzes their current financial situation, including income, pensions from various sources, and existing assets. It explores suitable pension schemes, considering the 2014/15 pension reforms, and evaluates the tax implications of lump-sum payments and inheritance. The plan outlines investment options, such as government bonds and mutual funds, aligning with the couple's risk tolerance and financial objectives. Additionally, it provides mortgage advice to their son, Harry, and emphasizes the importance of will creation for estate planning. The report includes detailed calculations, assumptions, and references to support its recommendations, aiming to secure a stable financial future for Alastair and Wendy.

Financial plan
FINANCIAL PLAN OF ALASTAIR AND WENDY WINDSOR

Scope
 Understanding the case in its entirety.
 Requirements of Alastair and Wendy.
 Financial objectives of Alastair and Wendy in the short and long run.
 Pension schemes suitable to the couple (Ellison, 2011).
 Tax matters affecting the financial plan of the couple.

Personal details and goals
 Alastair and Wendy aged 56 years and 49 years respectively are elderly
couple looking to secure their future.
 Finding stable sources to secure their future is the primary objective of
the financial plan.
 Both are employed and approaching the age of retirements.
 Alastair earns £26,500 per annum whereas Wendy earns £49,000 per
annum (Farrar, Moizer & Hyde, 2012).

Scope
 Pension reforms introduced in 2014/15.
 Effects of these reforms on income of the couple.
 Planning of estate.
 Selecting appropriate investment options.
 Suggestion to Harry for mortgage.

Assumptions
 Alastair wants to retire at an early age and if possible even now.
 The company in which Alastair works however pays pension at the age
of 60 years.
 It has been assumed that salaries of Alastair and Wendy have increased
(Hinz, 2011).
 New reforms of pension schemes have been availed by the couple.

Alastair’s pension
Pensions Amount (£)
Lump sum due (52410 + 15480) 67890.00
Annual income from pension (17470 + 5160) 22630.00
Total pension income 90520.00

Alastair’s pension
 The defined benefit scheme is for 19 years.
 Pension benefits shall be paid starting from 2022.
 Annual pension amount is £17,470.
 Again three lump sum payments can be received in addition to the
above annual pension, i.e. (17470 x 3) = £52,410.
 Transfer value of pension is £450,000.

Alastair’s pension
 Salary received from NHS is £26,500 per annum.
 Annual pension from NHS £5160.
 Three lump sum payment is (5160x 3) = £15480.
 Cover for life insurance is £49,500.
 The insurance cover shall be received by Wendy (FRASSI, GNECCO,
PAMMOLLI & WEN, 2018).

Wendy’s pension
Wendy has taught 8 years in private sector and 8 years Further Education
with 4 years from Higher Education. Contribution to pension fund was
10.2% of £ 49000, i.e. £ 4998. In addition entitled pension of £ 4500 and £
11700 as lump sum (Kira & Eijnatten, 2011).

Wendy’s pension
 10.2% of her annual salary (49000 x 10.2%) = £4998
 £4500 as entitled pension along with lump sum payment of £11700.
 Total pension to be received by Wendy at the age of 65 is calculated
below:
 (4568+2000) = £6568.

Key assumptions for Wendy’s
pension
 Wendy also wants to retire at an early age and if possible even now.
 It has been assumed that salary of Wendy has increased.
 New reforms of pension schemes have been availed by the couple.

Tax effects
 The lump sum payment of payment is taxable ta the rate of 40%.
 With taxation pension income is 20%.